Increasing the odds

In the world of finance, we have many strategies, many different financial instruments, and thousands of advisors who will be telling you to have a unique way of making a fortune. Some might be the right people with the right tools. Sometimes. Other tools or people can be wrong, are known to be flawed, or come down to a pure gamble.

Every investor has the opportunity to try out all these different ideas, tools, and strategies, as long as he or she has the money to do so, and of course, if he or she is willing to take the risk. But if you don’t see yourself in this category, there is still a way to become an investor. A successful one. And it’s surprisingly simple. No one else put it better than Warren Buffett:

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

While the context of this quote was referring to the topic of value investing, it still includes a simple message: When you invest, you should focus on buying great companies at a fair price.

This simple formula was the reason for Buffett’s success. There are of course a few more points to it, and it all doesn’t guarantee that you will become another super-rich person. But most of these rules are nothing else but common knowledge and by following them you will significantly improve your opportunity to do financially better.

So when I advise investing, I am not promising anybody to become rich. Instead, I am promising to increase the odds. By a large margin.

Increasing your financial well-being without investments puts you back at the odds of a lottery win. That’s 1 in 13,983,816 (according to Google). Now it’s hard to put a number on the odds of becoming rich through investments, but history and statistics put them significantly higher than that. I recommend here a short read to put it a little better into perspective. Better than I could write it here on a lazy Sunday afternoon.

So the message of this post is: When you invest, don’t do it for the promise of becoming rich. Do it for the purpose of increasing your odds to improve your financial well-being. That’s why investing is for everyone.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s